If you're a realtor, for example, think about a postcard campaign offering your services—and perhaps an invitation to a seminar about retirement communities—to home-owning parents whose youngest has just headed off to college. Or consider the effect of an insurance agency that specializes in business and property policies mailing personalized letters to companies that have just moved into new digs. That's the potential of electronic tools.

On This Page
Generating Powerful Contact Reports
Manage Your Expectations
1. Define Your Objectives
2. Test Your Return on Investment (ROI)
3. Polish the Offer
4. Reward Response
5. One Message Won't Do

Generating Powerful Contact Reports
When hard copy mailing lists are transformed into electronic databases, you can manipulate and mine the list for byte-sized nuggets. Whether it's your own customer list or one you rent from a trade group, a professional organization or a list broker, a database lets you identify customers as broadly or as narrowly as your prospect's profile. You can segment by age or income, by hobby or geography, by education, occupation or gender and by a dizzying array of special qualifiers, like car models or types of professional services or how many movies a consumer sees each month.

For example, 20 preformatted reports are available in Microsoft Office Outlook 2003 Business Contact Manager, a new Outlook 2003 add-in. These reports can help you identify targets for a direct mail campaign for prospects culled from your sales leads (called Opportunities in Business Contact Manager) or drawn from existing customers (using Accounts and Contacts in Business Contact Manager).

The Opportunity by Product report in Business Contact Manager lists all sales leads for each of your products or services, along with its revenue forecast. If you need further analysis, you can easily export Business Contact Manager Reports into Microsoft Office Excel 2003, which allows you to manipulate and analyze the data in other ways.Database marketing combined with direct mail gives you tangible reach and power, not to mention lower costs.

You can then create a direct mail piece tailored to your specific audience and message. Using Microsoft Office Publisher 2003, a business publishing and marketing materials program that's included in Microsoft Office Small Business Edition 2003, you can create direct marketing pieces efficiently and economically using templates provided within the product, or by downloading direct mail templates from Office Online (See Additional Resources for more details). Or, if you'd prefer, you can work with an outside design agency to create your direct mail piece.

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Manage Your Expectations
Precisely targeting consumers who are likely to be interested in your products or services hardly guarantees buyers, of course. Having a well-targeted list increases your odds of success. But parents who receive that realtor's postcard, for instance, might have no desire to move.

Average response rates for direct mail vary considerably, depending on what you're selling, the package's appeal, how distinctive your offer is, and the quality of your mailing list.

Overall, a good return on mass mailings to new prospects runs .1 percent to 5 percent. A 2 to 3 percent response is excellent. Anything near 5 percent is spectacular. When it comes to mailings to loyal customers, however—say, your top 10 percent of big spenders—you should expect returns closer to 30 percent and up. Successful mailings depend on clearly defined targets and goals.

Here are the steps to take that will reel in results.

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1. Define Your Objectives
Too many entrepreneurs dive into direct mail without a clear-cut strategy. Before drafting copy or evaluating lists, make sure you understand your goals and know what you want the mailer to achieve.

Direct mail can:

• Generate sales.

• Bring in foot traffic.

• Build recognition or brand awareness.

• Acquire new customers or referrals.

• Upgrade customer service.

• Respond to competitors.

• Support other marketing initiatives, such as newspaper or radio ads.

• Build customer loyalty by rewarding top-tier customers.

• Expand your market to a wider audience.

• Test the appeal of new products or services.

• Deliver company news such as upcoming sales or a branch opening.

• Act as a warm-up for later cold calls.

• Stimulate higher purchases from existing customers.

A recent survey completed by the United States Postal Service found that the top three reasons for increased frequency of direct mailers were company growth or expansion, change of strategy, and introduction of a new product.Make sure you're clear about what spells success. Then make sure you don't muddy your chances by setting too many goals at once.

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2. Test Your Return on Investment (ROI)
You can't judge a direct mail campaign simply by how many sales you generate. Think about it. Ten purchases from a 1,000-piece mailing may add up to a 1 percent response, but what's your net cost? If you shell out $10,000 for the mailing, then 10 orders cost you $1000 each. Did you turn a profit? If not, time for Plan B. Recalculate your costs and package.

Figure out how much you must earn from a direct mail effort, not the number of sales. Test your assumptions with a smaller mailing to a select group of your overall list (sometimes called a nth mailing, because it goes to every nth fraction on the list). That will give you enough feedback to edit or refine the package and budget before committing.

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3. Polish the Offer
When drafting the copy, look, feel and offer for your mail package, consider the 3 S's:

Simplify. Do not use this opportunity to brag about your company or include essays about the firm's history. Inform your customers about the benefits of one item or service. Don't confuse the customer with choices.

Specify. Tell him about the offer upfront (and preferably on the envelope). Then tell him again. Spell out details—clearly.

Showcase. Put yourself in the customer's place. Is this an offer you'd respond to? Make sure it's foolproof. Gift certificates usually work (you can create them in Publisher 2003 or download them from Office Online Template Gallery). Or, try free samples, discounts upon walking into the stop or salon or buy-one-get-one-free. For business-to-business marketing, options include offering seminars, white papers, and discounts.

Don't forget your call to action. The more ways you allow a customer to respond, the better your chances of getting a response. That includes fax-back and toll free phones, e-mail, postage-paid cards, credit card payments, long-term payment plans and so on.

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4. Reward Response
Whenever a customer responds to a direct mail offer, make sure you fully recognize it. Adding a little extra to, say, a free sample offer will keep your new customer coming back. You might build such bonuses into your campaign budget.

Or, you can reserve some extras for an attractive segment of your market—now easily identified with Outlook 2003 with Business Contact Manager. For instance, if you have key customer or sales lead data filed in another software application, such as ACT! or Microsoft Excel, you can easily import that information into Business Contact Manager to gain a comprehensive, integrated view.

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5. One Message Won't Do
Plan your campaign so you reach the same prospects more than once—preferably more than twice. It's more effective to send three mailers to 1,000 prospects than one mailer to 3,000—though the cost is the same. If your list is honed and qualified, then you'll get better results from frequent mailings. Also consider a timed or sequenced campaign. For instance: Postcard 1 is a teaser. Postcard 2 is a puzzle or half the offer. Postcard 3 delivers the gift. That way, you set up both expectations and recognition.

Finally, perhaps the best part of direct mail is how quickly you discover whether or not it's working. Results are measurable and definite, with information you can act on. You learn exactly what hooks your customer—or doesn't. And direct mail is flexible. You can recalibrate or refine at any time.

And when you do invest in a winner, you can rely on it to keep attracting business—so long as you update that list, of course.

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Joanna Krotz
Joanna L. Krotz writes about small-business marketing and management issues. She is the co-author of the "Microsoft Small Business Kit" and runs Muse2Muse Productions, a New York City-based custom publisher.

For customer support options, tailored business advice, and a single point of access for Microsoft's small-business solutions, see the Microsoft Small Business Center home page.

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